By Terrance S. Carter, Nancy E. Claridge and Sean S. Carter

Global Forum Highlights Regulatory Challenges and Opportunities for the Nonprofit Sector

The Financial Action Task Force’s (FATF) 2025 Private Sector Collaborative Forum (PSCF), held from March 25-27, 2025 in Mumbai, brought together stakeholders from across the public, private, and nonprofit sectors to explore the evolving landscape of anti-money laundering and counter-terrorism financing (AML/CFT). The discussions underscored both the value and the complexity of ensuring financial integrity without restricting the essential work of charities and not-for-profit organizations (NPOs).

The FATF is an inter-governmental body which exists in order to set standards and promote effective implementation of measures for combating money laundering, terrorist financing and other international threats. It has a list of 40 Recommendations, which according to their establishing document, “set out a comprehensive and consistent framework of measures which countries should implement in order to combat money laundering and terrorist financing.” The FATF Standards comprise the Recommendations and their interpretive notes, as well as a glossary which accommodates these documents.

This year marked the first time the PSCF was hosted outside Europe – a symbolic and strategic choice reflecting the growing importance of emerging economies in global financial governance. The forum focused on key issues shaping the future of financial regulation, particularly those related to access to financial institutions for civil society, financial inclusion, and the humanitarian impact of AML/CFT initiatives.

At the centre of the discussions were recent and ongoing revisions to key FATF standards, including Recommendations 1, 8, and 16 (all explained below). These revisions are intended to modernize the framework in response to evolving risks and technologies, but they also raise practical concerns for legitimate NPO operations – particularly those working in humanitarian contexts or across borders.

Revisions to Recommendation 8, which governs how countries assess and mitigate the risk of terrorist abuse in the nonprofit sector, have led to clearer guidance encouraging a proportionate, risk-based approach. However, challenges remain, which the PSCF noted. Many NPOs continue to experience financial exclusion due to overly cautious interpretations of these standards by banks and regulators.

Recommendation 1, which underpins the overall risk-based approach of the FATF framework, was also discussed. Participants noted that while a tailored approach to risk is essential, it often becomes resource-intensive and burdensome for smaller organizations. There were calls to ensure that regulators themselves bear responsibility for how the risk-based model is applied, shifting the onus away from those individuals and organizations being regulated.

Discussions around proposed updates to Recommendation 16, which deals with wire transfers and payment transparency, highlighted the need for balance. Reforms should strengthen controls against illicit finance while avoiding unintended consequences for NPOs, informal economies, and vulnerable communities. Ensuring that such measures do not compromise data privacy or impose unrealistic compliance burdens was a key concern raised by forum participants.

As discussions continue and the FATF moves forward with its standards review processes, the charitable sector must remain actively engaged. Ongoing dialogue and advocacy will be essential to ensuring that regulatory systems support – not hinder – public benefit work around the world.

UN Calls for Input on Sanctions, Humanitarian Action, and Human Rights

In a fast-evolving global landscape where sanctions, security measures, and compliance frameworks increasingly affect the delivery of humanitarian aid and public-interest work, the United Nations is seeking input on several key human rights questions. These consultations present an opportunity for Canadian charities and not-for-profit organizations engaged in international development, humanitarian aid, or rights-based advocacy to share their experiences, raise concerns, and help shape the development of future UN guidance.

Sanctions and Humanitarian Access

The UN Special Rapporteur on the negative impact of unilateral coercive measures is seeking input to inform a forthcoming Principles document addressing the growing tension between sanctions regimes and humanitarian action. This initiative focuses on how sanctions, often imposed without multilateral consensus, can obstruct humanitarian access, delay aid delivery, and create legal and ethical challenges for organizations operating in sanctioned territories.

One key area of concern is overcompliance and de-risking – where financial institutions, suppliers, and even NGOs go beyond what is legally required under sanctions out of caution, thereby cutting off access to essential services or resources for vulnerable populations. The UN wants to understand how these dynamics play out on the ground and gather examples of good practices, legal obstacles, and solutions adopted by stakeholders.

The deadline for feedback is Friday, May 2, 2025 at 5:30 PM ET. This call invites responses from states, civil society, lawyers, and humanitarian organizations. It’s particularly relevant for groups working with international partners or in areas affected by conflict or sanctions

Administrative Measures in Counter-Terrorism and PVE

The call for input comes from the Special Rapporteur on the promotion and protection of human rights while countering terrorism. The report aims to examine whether such measures align with international human rights standards and to identify good practices that uphold fundamental freedoms.

The deadline for feedback is Friday May 9, 2025. This consultation is highly relevant for NGOs and advocacy organizations that work on civil liberties, refugee and migration issues, or in post-conflict areas.

Accountability and Redress in the Sanctions Context

The third call for input seeks contributions to a Guidance document on accountability, redress, and effective remedies for harms caused by sanctions and related enforcement actions. The consultation aims to build out guidelines and benchmarks for ensuring access to justice and accountability

The deadline for feedback is Friday May 30, 2025 12 PM ET. Charities and not-for-profits that have encountered difficulty accessing funds, transferring aid, or supporting affected communities due to sanctions-related obstacles should consider sharing their experiences.

Whether it’s facing delays in cross-border payments, navigating risk-averse banking practices, or seeing program access denied due to vague sanctions policies, these concerns directly affect the operational capacity and mission delivery of charities and not-for-profits. Canadian organizations with international mandates, or who support marginalized groups affected by such measures, are encouraged to review the full calls for input and consider making a submission.

Global NPO Coalition Calls for Revisions to FATF’s Payment Transparency Rules

On April 14, 2025, the Global NPO Coalition on FATF (the “Coalition”) – a network of diverse not-for-profits – submitted formal input to the Financial Action Task Force (FATF) as part of the second public consultation on revisions to Recommendation 16 (Recommendation 16), which governs the information required for wire transfers and other value transfers. The Coalition’s submission provides a critical perspective on how proposed updates to FATF’s global standards could unintentionally restrict nonprofit organizations (NPOs) and the marginalized communities they serve from accessing financial systems.

While the Coalition supports FATF’s goals of increasing payment transparency, speed, and security, it warns that without careful revision, the proposed changes to Recommendation 16 risk exacerbating financial exclusion for NPOs operating in fragile, remote, or underserved regions of the world.

One of the Coalition’s primary concerns is the requirement for standardized originator and beneficiary addresses in payment transactions. This approach, they argue, does not reflect global realities – particularly in the developing world, where many communities operate without formal address systems.

By enforcing rigid address requirements, valid transactions risk being delayed or rejected, further marginalizing individuals and groups already excluded from mainstream financial systems.

The proposed introduction of mandatory Legal Entity Identifiers (LEIs), Unique Identifiers (UIDs), and Business Identifier Codes (BICs) is another flashpoint. The Coalition highlights that many NPOs, especially grassroots organizations, operate legally as unincorporated associations – and may not be registered entities at all. Applying mandatory global identifier requirements to such entities risks cutting them off from cross-border financial channels, despite their lawful operations.

The submission also raises serious concerns about date-of-birth requirements. According to UNICEF, over 150 million children under five lack birth registration worldwide. Requiring date-of-birth fields in payment systems without alternatives would disenfranchise those most in need of aid.

​Read the April 2025 Charity & NFP Law Update